IGO’s lithium punt is starting to pay dividends (literally)

Lithium prices hit record highs in 2022 and IGO said it received an average of $US3984 a tonne for the spodumene concentrate sold from Greenbushes.

For context, the same commodity was fetching less than $US500 a tonne when IGO launched its bid to acquire a stake in the lithium joint venture in late 2020.

The bear market for lithium through 2019 and 2020 ensured mines were idled and investment in new lithium mines was scarce.

Demand for lithium from battery manufacturers rebounded from late 2020 onward as big economies subsidised the purchase of electric vehicles as part of efforts to stimulate their economies after pandemic lockdowns.

That demand surge has thus far overwhelmed the lithium mining industry’s ability to increase supply, despite the fact Australian exports of lithium rich spodumene concentrate rose from 1.7 million tonnes in 2021 to more than 2.2 million in 2022.


Those statistics were published by the federal department of industry, which expects Australian export volumes will rise to 3.17 million tonnes in the year to June 2024 as miners like IGO, Mineral Resources and Pilbara Minerals ramp up exports.

IGO said received lithium prices would rise to average $US5957 a tonne in the three months to March 31 and the company said it may yet beat its full-year lithium volume guidance.

The lithium joint venture company paid $440 million of dividends to IGO over the past six months; eclipsing the $288 million of underlying earnings generated by IGO’s traditional nickel mining business.

That nickel business was disrupted by a fire at Western Australia’s Nova mine in December and IGO said that disruption had forced a downgrade to its full-year production volume target.

IGO had previously told investors that production at Nova could hit a maximum of 27,000 tonnes this year, but on Tuesday it downgraded that to a maximum of 25,000.

Mr Peker said IGO’s half year results were positive and had exceeded his expectations on production volumes, received prices, cashflow and shareholder returns.